Aquarius Platinum

By Dan Stratful

Friday 24th February 2012

Aquarius Platinum (ASX: AQP) is a risky share at the best of times, and it appears to be facing too many headwinds. Adding to this is its sovereign risk, or the operation of its mines in risky countries, particularly Zimbabwe.

AQP produces platinum group metals (PGMs) with assets on both the Bushveld Complex in South Africa and the Great Dyke in Zimbabwe, two of the most renowned PGM bearing deposits in the world.

AQP is the world’s fourth largest primary platinum producer, and its operations include four operating, mechanised low-cost producing mines, two retreatment facilities and one non-operating mine with an active exploration programme underway at and around existing AQP operations.

AQP’s attributable production for the second quarter ending 31 December 2011 (2Q) decreased by 4% quarter-on-quarter while average PGM dollar prices deteriorated with platinum and palladium falling 14% and 17% respectively and rhodium falling 16%.

The December quarter was tough and AQP reported that the entire platinum industry is facing challenges from all angles.

It reported that the region’s platinum industry is facing difficult trading conditions and that these should not be underestimated, hardly the type of news shareholders like to hear.

PGM margins remain low in both Rand and Dollar terms, oversupply issues and a poor economic outlook all provide a negative outlook, while cost and regulatory pressures also continue unabated.

AQP also reported increased stoppages and the continued underperformance by the lead mining contractor during the 2Q, which has led it to review its contractual relationship with the lead miner.

Status: SELL

AQP’s shares today traded at $2.19

For portfolio, sharemarket and fixed income enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, dan.stratful@irg.co.nz
**A disclosure statement is available, on request and free of charge.

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